The recent resignation of former SBI deputy managing director Manju Agarwal from the board of CMS Info Systems has brought to light the troubles faced by independent directors juggling multiple board positions. Agarwal’s decision to step down from CMS Info Systems came around the time of her resignation from Paytm Payments Bank Limited (PPBL), where she served as an independent director, according to a report by Economic Times.
Agarwal, who previously resigned from her position as an independent director of PPBL, sought reappointment in CMS Info Systems, another company where she served as a director. However, her decision to seek reappointment faced criticism due to her jumping the ship from PPBL and accusations of selective “preoccupation.” As a result of this criticism, Agarwal ultimately resigned from the board of CMS Info Systems just before the conclusion of the postal ballot voting on her reappointment, on March 1, as per the ET report.
The series of events suggested that Agarwal’s attempt at reappointment faced scrutiny and ultimately led to her resignation from the board of CMS Info Systems.
The timing of Agarwal’s departure from PPBL, which clashed with the Reserve Bank of India’s (RBI) ban on Paytm Payments Banks Limited, raised eyebrows among corporate governance experts and proxy advisory firms. While Agarwal cited “personal commitments” as the reason for her resignation from PPBL, her continued presence on the boards of eight other companies, including listed entities like Glenmark Life Sciences and Polycab India, drew scrutiny, the report added.
Proxy advisory firm Stakeholders Empowerment Services (SES) questioned Agarwal’s selective approach to her “personal commitments,” arguing that her resignation from PPBL carried little weight as the company was already set to cease operations within 28 days due to RBI’s restrictions. SES also criticised Agarwal’s supposed failure to protect the interests of minority shareholders at PPBL, raising doubts about her adherence to the duties expected of an independent director, the report explained.
“Does the resignation carry any meaning, as in the next 28 days PPBL was to go out of business anyway? The resignation within a day of RBI action raises lots of questions, although a colour has been given that resignation is due to personal commitments. One wonders as to how personal commitments get triggered only after a problem surfaces and that too it appears that personal commitment affects only one position, not eight other board positions and rest can continue unaffected,” proxy advisory firm Stakeholders Empowerment Services (SES) has asked in its report, as quoted by ET.
The situation has reignited the debate around the potential conflicts of interest and time constraints faced by independent directors who hold multiple board positions simultaneously. Agarwal’s extensive experience and expertise in the banking and finance sectors made her an attractive candidate for various board roles. However, her inability to navigate the challenges at PPBL has cast a shadow over her reputation as a diligent and effective independent director.
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Published: 06 Mar 2024, 12:46 PM IST